Good day, and thank you for standing by. Welcome to the FTC Solar Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bill Michalek, VP of Investor Relations. Please go ahead.

Thank you, and welcome, everyone, to FTC Solar's second quarter 2025 earnings conference call. Before today's call, you may reviewed our earnings release and supplemental financial information, which were posted earlier today. If you've not reviewed these documents, they are available on the Investor Relations section of our website at ftcsolar.com. I'm joined today by Yann Brandt, the company's President and Chief Executive Officer; Cathy Behnen, the company's Chief Financial Officer; and Patrick Cook, the company's Head of Capital Markets and BD. Before we begin, I remind everyone that today's discussion contains forward-looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date. As such, these forward-looking statements include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please refer to our press release and other SEC filings for more information on the specific risk factors. We assume no obligation to update such information, except as required by law. As you would expect, we will discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure. With that, I'll turn the call over to Yann.

Thanks, Bill, and good morning, everyone. It's great to be with you again and give you an update on the continued progress that FTC Solar is making to position the company as one of the leading single-access tracker providers in the market. As I approach my 1-year anniversary with FTC Solar, I can tell you that this has been one of the most dynamic and incredible of my nearly 20 years in the solar industry. My optimism about the company and its future is that in this moment of needing to build solar faster and more efficiently, we believe our tracker installs in less time with less people than any of our peers, and we don't think it's even close. The constructability is in our DNA, fewer parts and better features enable a reimagined solar tracker installation experience. I urge you to view the videos of our installations that we posted to see how tasks that may require 6 or 7 people in special tools with competing products are replaced with 2 people and no specialty tools or drills. Our clients are finding that new installation crews can be trained and operating full speed within minutes of the start of the day. It's just that simple to install. This constructability is protected by IP and inherent in the design that is the latest innovation to the tracker market. While it takes time to educate and advance the conversation with EPCs that have been doing it one way for years, this is exactly the progress we're making every single day. FTC is on more approved vendor list today than ever in our history, and we're just getting started. FTC continues to grow the sales team with EPC experts to help drive understanding of our constructability with our customers. These installation benefits…

Thanks, Yann, and good morning, everyone. I'll provide some additional color on our second quarter performance and our outlook. Beginning with a discussion of the second quarter, revenue came in at $20 million, which was within our guidance range of $19 million to $24 million. This revenue level represents a decrease of 4% compared to the prior quarter and an increase of 75% compared to the year-earlier quarter due to higher product volume. GAAP gross loss was $3.9 million or 19.6% of revenue compared to a gross loss of $3.4 million or 16.6% of revenue in the prior quarter. Non-GAAP gross loss was $3.5 million or 17.4% of revenue, also within our guidance range. The results for this quarter compares to non-GAAP gross loss of $3 million or 14.4% of revenue in the prior quarter. This quarter's results included a $4 million accrual related to our joint venture facility that was not contemplated in our guidance ranges. Excluding this charge, we would have returned to being non-GAAP gross profit positive for the first time since late 2023 at a positive $0.5 million. GAAP operating expenses were $7.6 million. On a non-GAAP basis, excluding stock-based compensation and certain other costs, operating expenses were $6.5 million, down from $8.3 million in the same quarter last year and $6.6 million in the prior quarter. This now represents the seventh consecutive quarter of OpEx reductions and our lowest OpEx level since 2020 as we continue to control costs. GAAP net loss was $15.4 million or $1.18 per diluted share compared to a loss of $3.8 million or $0.58 per diluted share in the prior quarter and a net loss of $12.2 million or $0.97 per diluted share post split in the year ago quarter. Adjusted EBITDA loss, which excludes approximately $5.1 million for a…

[Operator Instructions] Our first question comes from Philip Shen from ROTH Capital Partners.

First one is on the outlook for bookings. I think you guys said that the regulatory uncertainty has slowed some customer project planning. That said, we're just on the Shoals call and their bookings are accelerating, I think at a 1.2 book-to-bill and outperformed on their bookings and we've seen some of the other players do the same. And so I wanted to help -- if you see if you could help us understand perhaps the difference with your outlook versus what they're delivering. Is it an exposure to a different set of customers? Or what might be different or the same as well?

Yes. No, great question, Phil. I appreciate that. Yes. I mean look, I think ultimately, we're transitioning into a marketplace of 1P. And I can't speak to the rest of the market peers, but certainly, some of them are a lot more established with existing players and more Tier 1 EPCs and IPPs. And that's obviously what the setup is for FTC in terms of getting to the bookings. As we roll out the 1P, we have to really position the company for success, which I think we're making a lot of traction to do, including the $75 million raise, putting the sales team in place and then obviously, getting our road map finalized with the product. And now the bookings are expected to come in, in order to get additional growth in this 1P inflection that we're transitioning into.

Okay. Appreciate that. And so as we look ahead, when do you think we could see an acceleration of bookings. Should we think about it for this quarter? Or do we need to get past the executive order and -- I mean I guess that's coming around soon. So maybe we -- do we see acceleration in Q3, Q4? Or should we look at it more in 2026?

Yes. We're certainly optimistic around the bookings accelerating significantly. Obviously, we're coming from a 1P base that's relatively low and breaking into a market that has strong peers. The executive order, I think, will determine what the pace and scale is of safe harbor, whereas the existing projects that we've been working on for quite a bit, those projects getting financial close and getting the financing in place to build. I think when we talk about the dynamic nature of the legislative environment, not every IPP, an asset owner looks to hold the asset beyond development stage. And it was really difficult for those kinds of clients, which tend to be a large portion of ours from closing and ultimately getting into construction when they're uncertain around how tax equity, et cetera, will play. I think that portion being behind us, safe harbor will be some version or have some influence on timing of scale, but we think, ultimately, we're well situated for both. And on safe harbor, in particular, our ability to be agnostic on module for -- with our torque tubes plays really well with asset owners being able to safe harbor something, while not having all of their material supply figured out.

Okay. Got it. One last one for me. I know you don't have any guidance for '26 and can't guide there. But -- was wondering if you could talk through how you expect the year to play out and maybe provide a bit of a margin kind of trajectory between now and year in '26, if you guys can? Or if not, perhaps just a little bit of color on how to help us frame the situation.

Yes. I'll stay away from specifics, but let me frame it. 2026 is shaping to be the pivotal year for FTC. Our road map is where we want it to be. Our sales force and sales team in the U.S. and globally have built these relationships that speak to the constructibility. In a world where the labor market is super tight, and there's so much solar to be built, saving significant percentage on the insulation speeds is what really puts FTC's value proposition in the forefront, both for bookings, top line and margin we're really optimistic around where we stand. We'll have more to say in the coming quarters. But that's the path we're marching down and executing against. And now we have a lot of the base -- the foundational pieces in place, including the balance sheet that we needed in order to be able to do that.

Yes. Congrats on the $75 million deal.

Our next question comes from Jeff Osborne at TD Cowen.

Maybe just a follow-up on Phil's line of questioning. What is the sort of voice of the smaller IPPs and EPCs? Is it just solely waiting for clarity from the July 7th executive order? Or is there challenges in getting financing and moving the projects forward? I'm just trying to bridge the gap. My sense is that the third quarter guidance is probably less than you were anticipating maybe 2, 3 months ago, and then what gives you the confidence that assuming it's that group of customers that have been a bit paused here, what gives you the confidence that they're going to move forward in the fourth quarter?

Yes. No. The confidence comes from -- we're working really closely with them. Obviously, a lot of our team has been in and around project finance for many years. The -- I would say, strategically, the main thing that's happened in capital raise for smaller project developers is putting capital in place not just for individual projects, but for the broader pipeline, given the strategy on how to maximize the value of those assets sort of came to forefront with less years on the ITC window. So the executive order is going to impact the size and scale of safe harbor, and the strategy around maybe earlier stage projects in the pipeline. But our confidence comes from the fact that there's usually not just one term sheet from major players that want to buy these developed solar assets. And so we see those projects transacting and getting to close. And obviously, that will then roll into being actionable revenue opportunities for FTC.

Got it. Maybe for you, Yann, or someone else. But if we could just flesh out the $4 million charge in the quarter, was that associated with the Sealy facility and then the associated FIAC rules that were implemented? Or maybe just describe, a, what the $4 million is related to? And then now that FIAC is out in the July 4 bill, how is the Sealy -- what's the ownership structure of Sealy relative to what's needed with the new rules?

Yes. Let me have Cathy answer the $4 million. I'll come back and answer the tail end of your question.

Okay. Sure. Jeff, the $4 million was related to an agreement that we had in the JV on minimum purchase commitments with Alpha Steel, and we entered that before the facility ever opened. So that's what the $4 million accrual is related on. There's kind of a lot of different components to it. And so we're still in discussions with the team, but $4 million is the maximum potential impact, and we haven't made any payment at this point.

And so FIAC doesn't impact the $4 million accrual. It is -- there's obviously going to be a lot of motion across the landscape of manufacturing. So we're looking at the options for us. We have a great partner in that JV. So there's a few options. It's not a large facility. So from a material assistance perspective, it's really de minimis. But -- so we're working through it, but we have a good partner and expect to be able to continue to work there.

Got it. And my last one was just on the capital raise. Great to see, but just what was the sort of the logic or rationale of going that route with the warrant structure relative to -- I think you had a $60 million ATM that had been untapped for quite some time. So what was the trade-off did you need the 2 tranches within short order and just the amount of time it would have taken to come up with the 37.5% relative to using the ATM is less pressure on the stock? Was that the industrial logic, or what was the thought process?

Yes. I think it was opportunistic. I mean we have now a great partner in Cleanhill. It really signifies the positioning that FTC is in relative to the market and our peers and the differentiated technology. It's hard to be innovative in something like trackers, right? And especially the step change that we're looking to achieve in terms of the labor savings and constructability. So the opportunity arose to do something larger with Cleanhill, we looked at that versus the other options that are on the table. And sort of based on what we -- our optimism says is ahead for us. We wanted to make sure that we had the right balance sheet in place. And our customers have been really positive. Like I said in the prepared remarks, it's opened doors just in the last couple of weeks of customers that we're looking at watching FTC's growth and sort of bring us back to the table and bidding work that we were hopeful to get, but weren't expecting to get this quickly. So we anticipate that this balance sheet enhancement at that scale is going to get us to the point we want to get to a little bit faster.

[Operator Instructions] Our next question comes from Sameer Joshi, H.C. Wainwright.

Just digging deeper into sort of the revenue mix between products and services. Obviously, this quarter, product revenues were lower, service were higher. Was that -- question one, was that just seasonality? Or should we read something more in that? And then part two, how do you see 3Q product mix or revenue mix?

Yes. Cathy, can I ask you to..

Yes, absolutely. No. So on services, no, it's really just a mix of project and project timing. So in services, we have all of our logistics and delivery services for all of our projects. So it's the timing of production versus delivery, plus we do some engineering services contracts as kind of the timing. We had a pretty large engineering services contract during Q1, I think you'll see in -- I'm sorry, in Q2. I think you'll see as we move into Q3, you'll see a little bit more tilt towards the production side of it as you go into Q3.

Understood. And as a corollary to that, the guidance or rather the outlook for 3Q gross profit is higher than what you saw in 2Q? Is that again because of revenue mix? Or is that because of elimination of certain accrual charges you talked about.

Yes, it is a combination. It's a combination of revenue mix. It's also -- it's the $4 million impact of -- that $4 million accrual in Q2.

Understood. And then just following up on previous questions regarding the financing. Do you expect this timing of the drawdown to be -- to be alongside your expected bookings, and also, can you just help us understand relative to a project being installed and constructed, what is your revenue recognition time line on that?

I think your first question is the correlation between the second tranche of the capital drawdown. That doesn't have relation to anything project related is just a function of meeting the shareholder vote. And -- but Cathy, do you want to give some light on revenue -- the revenue recognition to the extent that we share that?

Yes. So Sameer, our revenue recognition, I think, similar to all of our competitors, we're recognizing revenue over time as a project progresses through the production life cycle of the project. So once execution begins and production begins, we recognize it as based on percentage of completion throughout the project.

Got it. Understood.

At this moment in time, I'm showing no further questions. So I'd like to go ahead and conclude the call. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.